Illegal mining in South Africa has increased exponentially over the last few years, and it currently makes headline news, for all the wrong reasons. Illegal mining is extremely dangerous for several reasons including that the illegal miners do not work within the statutory framework requirements and do not apply health, safety and environmental laws. Illegal mining is of course just that – illegal, and successful illegal mining requires co-operation from a range of stakeholders including persons actually carrying out the mining operations, through to the networks that purchase and dispose of the illegally mined minerals. This complex web of participants often includes employees of mining companies (and employees of service providers to the mines) that are carrying out their mining operations lawfully. Not all illegal mining takes place at abandoned or old mines, and often, illegal mining is carried out alongside lawful mining operations, and illegal intrusions onto mines that are being operated lawfully are now commonplace. This brings up at least two considerations, namely (a) access to and accessibility of the mine, and (b) the consequences if an illegal miner (or another person) for example drowns in an accumulation of water on the mine (which has occurred on several occasions recently) or, for example, is burnt, when accessing a coal stockpile with spontaneous combustion (an occurrence on coal mines).
Let me sketch a scenario. A group of illegal miners approach a security guard employed by a mine, payment is made, and the security guard unlocks the gate, allowing the illegal miners to enter and leave the mine as they require. A member of a community near the mine walks past the unlocked or open gate and decides to take a short cut across the mine. While walking across the mine the member of the community falls into an accumulation of water and drowns.
There are a number of laws that will apply to this scenario, but in this article we address the key question of whether or not the mining company can be held vicariously liable for the death of the community member, within the context of the judgment of the High Court of South Africa (Eastern Cape, Grahamstown) in the matter between Oudehoutkloof Boerdery (Pty) Ltd and Others v Jan Louis Venter, case number 1649/2018 which was handed down on 16 September 2021 (Oudehoutkloof Judgment).
In summary, the son of Jan Louis Venter (the Defendant), Casper Venter, who was an employee of his father’s business defrauded the eight Plaintiffs without the knowledge of his father and, tragically, committed suicide shortly before the fraud was going to be made known to his father.
The court had to determine whether the delict committed by Casper Venter was in fact committed within the normal course and scope of his employment with the Defendant and whether the delict committed was sufficiently close to his course and scope of employment to give rise to vicarious liability (i.e. making the Defendant, his father, liable for the losses sustained by the Plaintiffs).
The point of departure is that an employer is responsible for the delicts (intentional or negligent acts or omissions) of an employee committed in the course of employment.
The court in the Oudehoutkloof Judgment referred to an old Appellate Division judgment in the matter of Mkize v Martens 1914 AD382 (Mkize Judgment) to explain the underlying reasoning for this point of departure. Reference was made to Chief Justice Shaw of Massachusetts who stated “I am answerable for the wrongs of my servant or agent, not because he is authorised by me or personally represents me, but because he is about my affairs, and I am bound to see that my affairs are conducted with due regard to the safety of others”.
The policy formulations that underpin vicarious liability have been addressed in several judgments and have been cited in the recent judgment of the Supreme Court of Appeal in the matter of Stallion Security (Pty) Ltd v Van Staden 2020(1) SA 64 (SCA) at paragraph 14 (Stallion Judgment). The court in the Stallion Judgement referred to Hearn v Nichols 90 ER 1154, where the court held that a person (employer) who puts trust and confidence in the “deceiver” (the dishonest employee) should be the loser rather than a stranger (an innocent third party).
However, an employer has not, historically, been held responsible for the acts performed by an employee solely for his/her own interests and purposes, and outside his/her authority (often referred to as the employee being on a “frolic of their own”). This is because where an employee acts solely for his/her own interest and purposes and outside his/her authority these acts are not considered to be in the course of his/her employment, even though they may have occurred during employment. In the Mkize Judgment, the court distinguished between acts of an employee that were done “in” or “outside of” the course and scope of employment. The court however emphasised that it was a question of fact that had to be decided on the circumstances of each particular case.
As the court in the Oudehoutkloof Judgment stated, vicarious liability is normally not challenging to apply where the employee commits a delict while solely or partially going about the business of the employer. However, when an employee commits an intentional wrong entirely for his/her own purposes, it is not as easy.
The Oudehoutkloof Judgment assessed the “modern test” for vicarious liability in cases of “deviation” from authorised duty. The modern test is based on the majority judgment of the court in the Minister of Police v Rabie 1986 (1) SA 117(A) (Rabie Judgment). In the Rabie Judgment, the test for vicarious liability in cases of “deviation” from authorised duty, is summarised as follows:
- If an employee is attempting, even if it is done improperly, to advance his/her employer’s interests, the employer may be vicariously liable. This is a subjective test. On the subjective test there would be no vicarious liability if the employee was acting solely in his/her own interests;
- Even if there is no vicarious liability on the subjective test, the employer may still be liable if objectively there is a sufficiently close link between the employee’s acts for his/her own interests and the purposes and business of the employer. This is an objective test.
The modern test set out in the Rabie Judgment was considered within the framework of South Africa’s Constitution in the matter of K v Minister of Safety and Security 2005 (6) SA 419(CC) (K Judgment), where the court confirmed that the objective component of the test set out in the Rabie Judgment, was sufficiently flexible to incorporate constitutional norms and other norms, and it requires a court when applying the test set out in the Rabie Judgment, to articulate its reasoning for its conclusions as to whether there is a sufficient connection between the wrongful conduct and the employment, or not. The objective component of the test set out in the Rabie Judgment is therefore not simple – it requires consideration of a range of factors.
The Oudehoutkloof Judgment referred to various cases that have confirmed an employer’s liability to a third party for the act of an employee considered to be “in the course of employment” even though the act itself is unlawful or prohibited. It goes further and refers to the judgements of South African courts that have confirmed that the application of this general principle does not entail that every act of an employee committed during the time of employment, in the advancement of his/her personal interests or the achievement of his/her own goals, necessarily falls outside the course and scope of employment.
The Oudehoutkloof Judgment states that it has also been held that whether an employee had indeed abandoned his or her employment was a factual question which had to be decided on the probabilities mainly, if not exclusively, of the degree of digression (the greater the degree of deviation the less likely the employer will be held vicariously liable). In answering the question of the degree of deviation, a court must have regard to all relevant aspects. Ultimately, a sufficiently close link must exist between the wrongful act of the employee, on the one hand, and the business or enterprise of the employer, on the other, for the employer to be held liable.
It is of course a complex question to determine what constitutes “sufficiently close” i.e. how far must the employer go to avoid being liable on the basis that there is a “sufficiently close” link. The general principle is that where the business of the employer furnished the “mere opportunity to the employee to commit the wrong”, this would typically not be sufficient to create a causal link. The court confirmed that something more was needed, and that this depended on the factual circumstances and the relevant considerations relevant to each case.
In the K Judgment the Constitutional Court restated the relevant principles in determining whether an employer is vicariously liable for an employee’s unauthorised intentional wrong doing namely:
- Courts should openly confront the question of where the liability should lie against the employer, rather than obscuring the decision beneath semantic discussions of “scope of employment” and “mode of conduct”;
- The fundamental question is whether the wrongful act is sufficiently related to conduct authorised by the employer to justify the imposition of vicarious liability;
- Vicarious liability is generally appropriate where the is a sufficient connection between the creation or enhancement of the risk and the wrong that accrues therefrom, even if unrelated to the employer’s desires;
- In determining the sufficiency of the connection between the employer’s creation or enhancement of the risk and the wrong complained of, subsidiary factors may be considered, which vary with the nature of the case. These relevant factors may include but are not limited to the opportunity that the enterprise afforded the employee to abuse his/her power, the extent to which the wrongful act may have furthered the employer’s aims (and hence be more likely to have been committed by the employee), the extent to which the wrongful act was related to friction, confrontation or intimacy inherent in the employer’s enterprise, the extent of power conferred on the employee in relation to the victim, and the vulnerability of potential victims to wrongful exercise of the employer’s power.
In summary, the creation of risk of harm that eventuated is an important consideration in determining vicarious liability under the “close connection” test. The creation of risk of harm by an employer may constitute a relevant consideration. In the case of the Minister of Safety and Security v Japmoco BK t/a Status Motors 2002 (5) SA 649(SCA), police had intentionally issued false motor vehicle clearance certificates. The court held that each of them was performing the exact task assigned to them, even where the motor vehicle clearance certificates were being issued dishonestly and it could not therefore be said that they had totally distanced themselves from their assigned duties. The court concluded that there was a close connection between the employees’ actions for their own interests and purposes, and the business of the employer, and therefore, their employer was in principle responsible for their actions.
Where, objectively, there is closeness of purpose, planning and effect in the fraudulent actions of employees, which resembled what they are employed to do, it is possible to hold the employer vicariously liable. The policy reasons underlying this, are that an employer must bear the burden of employee wrongdoing in the absence of any countervailing policy considerations. This means that an employer will not necessarily be held vicariously liable in each and every circumstance where there is closeness of purpose, which resembles what the employees are required to do. The “modern test” within a constitutional framework requires all policy considerations to be taken into account, to determine, whether, objectively, there is sufficient closeness of purpose, planning and effect which resembles what an employee is in fact authorised to do.
The court in the Oudehoutkloof Judgment applied the law to the circumstances of the matter and indicated that it was a clear case of a deliberately dishonest employee (Casper Venter). The court went so far as to say that it may be accepted that Casper Venter’s conduct was unauthorised and criminal, and that he misused his position and defrauded his employer. When doing so he only had his own interests in mind, and when applying only the subjective deviation test, the employer would not be held vicariously liable. The court indicated that applying the pre-constitutional standard test for vicarious liability may also have resulted in this conclusion in respect of the objective dimension of the test, and the court referred to the Supreme Court of Appeal matter of the Minister of Defence v Von Benecke 2013 (2) SA 361 (SCA) (Van Benecke Judgment) at paragraph 13 where the Supreme Court of Appeal held that, objectively considered, the theft and removal by an employee formed no part of his duties, and there was no link between his own interests, as executed through the theft, and the business of his employer. In the standard terminology the conduct fell outside both the course and scope of his employment, and the fact that the employee had been employed to safeguard the armoury, did not provide the necessary connection. The court stated “there is in my view a clear distinction between a negligent performance of a task entrusted to an employee, which the employer must usually bear responsibility, and conduct which is in itself a negation of or disassociation from the employee/employer relationship. The theft committed by (the employee) falls into the second category”. The court in the Van Benecke Judgement also however pointed out that this is not the end of the matter, and an employee’s intentional conduct may nevertheless fall within the scope of employment for considering vicarious liability. A court that finds that the standard test is not met must also ask itself whether the rule does not require development and extension to accommodate the particular set of facts.
This development includes constitutional norms and principles and norms and social and economic considerations.
The court in the Oudehoutkloof Judgment concluded by stating that the key question is whether there is a sufficiently close link between the employees’ acts for his/her own interests, and the purposes and business of the employer’s enterprise (business). The court found that the fact that an employee’s conduct is wrongful and unauthorised does not take the core (key) issue any further. In this case, the employer’s business activities created some form of risk for potential customers i.e. its senior employee was untrustworthy (unbeknown to the employer). The roles performed by the employee in the employer’s business afforded him scope to abuse his power to the detriment of the Plaintiffs. The source of that power was the employer itself who distanced himself by implicitly trusting his son (the employee) with the running of the business.
The court went further and stated that holding an employer liable even where the employer itself is not negligent, may have a deterrent effect, and employers are most often in a position to reduce accidents and intentional wrongs by efficient organisation and supervision. Holding the employer vicariously liable for the wrongs of an employee may encourage an employer to take appropriate steps and reduce the risk of future harm.
In summary, the court concluded that the way in which the business was run, left potential customers vulnerable to becoming victims of the wrongful exercise of “workplace power”.
Where an employer’s systems are not as efficient as they could be, this goes beyond creating a “mere opportunity” for abuse, and can actually facilitate employee actions, so that there is a sufficiently close causal link with the wrongful actions for purposes of establishing vicarious liability.
The court emphasised that loss should fall on the party that could most easily have prevented the harm (through the wrongful and unlawful conduct of the employee).
Coming back to the scenario which I sketched above, based on the current case law, the mining company which employed the security guard who opened the gate for the illegal miners, could be held vicariously liable for the losses sustained as a result of the death of the community member.
There are a number of key lessons for mining companies who face illegal mining challenges each and every day, including the importance of (a) implementing a rigorous recruitment process, (b) conducting proper and comprehensive hazard identification and risk assessments, (c) implementing appropriate health and safety and other systems to address the identified hazards and the assessed risks, in support of compliance with, amongst others, responsibilities set out in section 5(1) and 5(2) of the Mine Health and Safety Act, No. 29 of 1996, (d) implementing comprehensive over inspection systems which “test what is in place” at regular intervals and (e) regular review of the systems to ensure that they are, at any point in time, as efficient as they can be based on all available information.
For more information, please contact Warren Beech at warren@bv-inc.co.za.